Application compatibility and affiliation in two-sided markets

Masayoshi Maruyama and Yusuke Zennyo

Economics Letters, 2015, vol. 130, issue C, 39-42

Abstract: This paper analyzes the unilateral choices of application compatibility by platforms and the endogenous affiliations of two different groups (content providers and users). We find a novel result that for both platforms to unilaterally choose application compatibility is not an equilibrium unless the cost for achieving application compatibility is zero. We also find that asymmetric equilibria exist with regard to other content, where one platform chooses incompatibility while the other platform chooses compatibility and that, these asymmetric equilibria are harmful both to the content providers and to users, compared to the (out-of-equilibrium) outcome where both platforms choose application compatibility.

Keywords: Compatibility; Application; Affiliation; Platform; Two-sided markets (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 L15 L22 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:130:y:2015:i:c:p:39-42

DOI: 10.1016/j.econlet.2015.02.019

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